WORLD TRADE  
ORGANIZATION  TN/AG/SCC/W/7 
16 March 2007 
 (07-1143) 
Sub-Committee on Cotton  
  
 
 
DIRECTOR-GENERAL'S CONSULTATIVE FRAMEWORK MECHANISM ON COTTON 
 
HIGH-LEVEL SESSION, 15-16 MARCH 2007 
 
Director-General's Summary Remarks
 
 
 
• Given the present crisis in this sector, cotton remains one of the "litmus tests" of the 
development content of the Doha Round hence ur gency of a breakthrough in DDA;  reform in 
producing countries is happening;  reform in subsidies is still under negotiation. 
 
• "Coherence" between the trade, the domestic reform and the development assistance tracks 
needs improvement. 
 
Development Assistance  
• Certain revisions and updates
 will already be made to the Evolving Working Table on Cotton 
Development Assistance , contained in document WT/L/ 670.  Additional precision was 
brought to a number of the projects and programs contained in the Table, which must now be reflected. 
 
• A number of "methodological adjustments
" to the Evolving Working Table on Cotton 
Development Assistance  will be made – adjustments which would add to the transparency of 
the exercise being conducted, allowing it to better reflect reality. 
 
(1) distinguish between cotton-specific and non-cotton specific assistance.  (2) distinguish between the "status" of the different types funds put at the disposal of 
African cotton-producing countries: 
 
- Funds that are " available " to cotton producing countries, but these countries  
need to identify projects requiring these funds;  
 - Funds that are already " committed " by donors. 
 
 - And, finally, funds that have actually been " disbursed " to the cotton 
producing countries.  
 
(3) divide the Evolving Working Table on Cotton Development Assistance  into two parts.  
The first part would contain projects alread y completed in 2004, and the second part 
would consist of projects that are curre ntly ongoing and evolving in multi-year 
programs. 
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  (4) whatever the adjustments to the presenta tion of the table, however, the gap between 
available funds and disbursed funds remain s too wide and must be bridged through 
further dialogue between both donors and recipients. 
 
• Continued cotton sector reform is crucial to th e effective utilization of development assistance 
funds, and to the long-term success and viab ility of the cotton sector in cotton-producing 
African countries. 
 
• Debt relief flexibility in the use Multilateral Debt Relief Initiative , including for the cotton 
sector must be clarified.  This issue will require follow-up with both the World Bank (WB) 
and the International Monetary Fund (IMF). 
 
• Various proposals are on the table for South-South cooperation. 
 
Mechanism to Deal with Income Decline 
 
• Price declines and price volatility stem from trade distortions and from structural factors, the 
proportions of which remains still under debate. 
 
• There is consensus neither on the idea of a "compensation fund," nor on who would fund it.  
 
• Interest for exploring market-based a pproaches for "smoothing mechanisms" ( Fonds de 
lissage ) to address both the long-term decline and the volatility in the price of cotton, and its 
resultant macro-economic and fiscal pressure.  Some donors have started supporting such 
schemes.  This issue should be followed up by the donor community.  
 Trade Policy Aspects  
• No Round without cotton being on board. 
 
• An ambitious, expeditious and specific outcome  on cotton across all three pillars of the 
agriculture negotiations is mandated. 
 
• Progress has already been made on two of the three pillars at the Hong Kong Ministerial 
Conference:  Duty free – quota free, and export subsidies elimination. 
 
• Trade-distorting subsidies, amber and blue  box, are part of the ongoing negotiations. 
 
Coherence 
 
• Ongoing major domestic reforms in cotton produci ng countries.  Privatisation, integration, 
productivity, quality, improvement in technology competitiveness. 
 
• Two crucial dimensions:  regiona l and transparency in prices. 
 
• Interagency coordination:  needs to be country-based. 
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  Follow-Up 
 
• Necessary changes to be introduced to the reporting on cotton development assistance. 
 
• The WB/IMF:  need to follow up on the impact of debt relief on cotton funding. 
 
• Fonds de lissage:  to be taken up by Donor Community. 
 
• Subsidies reduction:  Linked to breakth rough in the Doha Development Agenda. 
 
  
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